Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the Hudson Pacific Properties Fourth Quarter 2022 Conference Call. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Laura Campbell, Executive Vice President, Investor Relations and Marketing. Please go ahead.

Laura Campbell

everyone. morning, Good us. joining Thanks for With me CEO CFO; Victor our call Art on Chairman; Mark the and Leasing. Diramerian, EVP are Lammas, Suazo, Coleman, of today President; and Harout supplemental we on both Yesterday, now our on available earnings our release are X-K the SEC, filed with and website. and for audio available will webcast website. our call this on An of be replay

regarding well earnings Some in nature. forward-looking a of today release supplemental non-GAAP used call and is financial the as information on the we'll forward-looking for of reconciliation this statements reference as share our information on measures Please call.

will XXXX and financial XXXX outlook. will discuss review Today, review highlights XXXX Victor Mark trends results and leasing office will our quarter development priorities, macro along fourth with our markets. and and our across Harout accomplishments our

happy questions. Thereafter, take we'll your be to

Victor?

Victor Coleman

you, morning, Good joining and for thanks Laura. Thank us. everyone,

Pacific's Let our year. recycling, leasing, accomplishments, XXXX which me align balance around that development, outlined highlighting sheet ESG by the centered time capital last key at and this I start objectives Hudson X with call management on

X me $XXX additional over total gross with square an just our proceeds gross XXXX. leased XXXX, achieved asset all from sales, Landing a of million in closed long-term of square closing of of and X.X of GAAP for rent dispositions nonstrategic on growth XXX,XXX our planned million. proceeds for fourth executed $XXX X and with cash XX% last X%, $XXX start combined year million now positive respectively. for Skyway our than feet and shy leasing. average We million feet of up Let more We We

on million feet. to totaling leading off-market X feet, and space, amenitized under-construction square projects and production provider stage efforts projects we future we progress our purchased office studio our an square our grow of for world-class office X X.X a XXX,XXX portfolio, studio and good to securing collaborative totaling and while services made Quixote entitlements transaction, sustainable part the As

now last our liquidity down total proceeds with and focus bond sales $X We $XXX refinance and and offering pay have successful green using a on asset year million billion debt. of from to

through percent. also to total XX-plus our and caps at fixed rate We our cap and interest debt reduced maintain exposure swaps

return our our continue stock our year, dividend and just over repurchasing million We a year ratio to throughout $XXX shareholders capital approximately AFFO of the common with to stable full XX%. of payout maintaining

And as We Leader winning the sustainability also in and and prioritizing in number workforces. further excellence, one in GRESB recently, Light platform and of Americas most achieve to Bloomberg America's our ESG with Gender and responsible in sustainable recognized ranking we NAREIT's by one, the office most Newsweek by during XXXX. the included equitable Index companies were continue the stakeholders Award companies XXXX aligning Equality

and work proud complex dynamic and our team Hudson very creating shareholders value also our for Pacific towards highly to environment. the and execute of long-term I'm ability in this

world-class portfolio Our expertise confluence several strategy the we our platform company places unique optimally and as that Therein cycle. believe for the full-service to trends and our leverage opportunity Hudson transitory. Pacific are the we of industry lies position macroeconomic next at

reemphasize willingness productivity improve in on result portfolio light and tenant see employer remains Utilization we believe thus occupancy. the employee asset to multiple coming assets but higher XX% utilization growing and workforce in layoffs in XX% even our and return, peak will towards continue office to to We trending recent the across in the of especially very prove specific, to year. being with mandates and utilization

for our on workforce. of markets loan largest notices, U.S. companies X Looking total American layoffs accounting among about X last the North at XX% over of those the layoffs months, the about impacted X% tech only company's based

throughout gains with recall We tech notably no the augmentation in massive declined companies these media among months. hiring hiring footprint. recent little office of their pandemic was the industries or and While had

or U.S. levels sectors Seattle employment tech In our at long-term and much are XX% still Area pre-pandemic media related case in in as as the levels, and above secular Bay reflecting above. well of strength markets, the target the inherent

job postings are XX% IT in pandemic above to XX% the Indeed. according and Software still to levels

we This and $XXX tech Google rightsizes, and have and as that billion record they're capital talent beyond and the to companies give invest and Series companies, within XXXX past A next in innovative And done Amazon. our the ultimately raised as or they've know cycles. and amounts the capital in will big of high-growth portfolio about just active. to in rise will still rounds, VDC next out medium-sized spin B very build next firms will small expand

a including top studios, others, a year As content Amazon perhaps a content to total quarter, spend projecting still $XXX XX% to fourth a of billion up we're more of expected of TV, increase and on X%. was year, Original total new high. Apple and of Netflix, spend is spend, indicator better Disney, the XX% accounts last moderate this typically to the from to which production for by XX%

and production late Studio moderate union in ahead as well contract Amazon to we and of which measures, fourth factors, did austerity attribute negotiations caution spring see the Angeles, we several MGM seasonality. in activity studios the including as Los However, here the Discovery WarnerMedia annual quarter, growing particularly acquisitions

around these our and and leases trends footprint long-term the new preferences. to creation diverse increasingly monitor client a current and priorities content meet of but ability through remain platform We'll fundamentals long-term offering product confident geographic the in and and combination the to of continue

be office track studio grow high-touch, inspire when innovative rents. At leases sustainable record the and their execute came to to execution, creative, and and services Hudson space, and our bar work And most high-quality, companies opportunities, so collaborative, in we've it uncover it ability creative premier doing, deliver Pacific, upon we're building and employees. world's strong set a to environments related the of

this forefront evolve next industries shift. the again, these once we of at As will and grow be

vertically unique shareholders. strategy significant create our service optimize expeditiously our ways in and to of integrated value to platform fully team continue and will leverage value cycle that's We our relationships for that our could portfolio platform we seasoned tested our full programs,

which our to do further strengthen reducing a businesses our sustainability through and hedges, ahead Looking become to of XXXX we Washington on creation goal ESG balance follows: priorities of address office value value and our rent to development through the to opportunities, XXXX continue rate our our has and continue and lease to near-term our studio and to and shareholders. for successfully sheet, asset risk sales delevering how Sunset execute and by leadership office are preserving long-term expirations occupancy, as hallmark finally, with create interest Glenoaks specifically 'XX, our

Now over Mark. going call to the turn I'm to

Mark Lammas

Thanks, Victor.

This with Foster This team for XXX,XXX in the up fourth positive hustle. new XX.X%. XX-year over of the signed was XXX,XXX lease points portfolio City, win large absorption a square square deal in feet largest for software only basis San which quarter, foot, leasing drove square XX,XXX And to Our percentage traded team. XX the continues to publicly of Metro renewal not lease Peninsula and and our our office along in the leases. feet Center included and net the in-service largest a Francisco quarter, resulted also the we a entire in company at but

foot the XXXX with Francisco. a Palo XXXX XX,XXX of also XXXX Stanford at Martin full Alto, XX-year Porter renewal activity SFMTA Lockheed of and square XX-year Market deals our addressed with building XX,XXX square-foot with included in X in Both larger Our at backfill lease a San expirations.

renewal close by year, were rents GAAP in Stanford's percentage. Stanford still higher. Washington cash X.X%, were Note fourth our rents vacated on fourth rents and up X% deals down this driven included is to on were our Our Adjusted Porter. that quarter at cash quarter which primarily lease of XXXXX X for NFL, the XX%, while XXXX XXXXX January lease,

Although property able we actively to our that entirety single to of negotiate is coming for we tenant residential as make of as pending a review location be advantage Sony. take we to with continue options. its months in and exploring prime to City expect we're the the decision This redevelopment of Culver Up the asset, a

we X.X opportunities significant our continue million sign feet to we square pipeline Even leasing leases, stages. as in at multiple have of

activity XXXX. on in also both our of expirations X block have large We currently only

San coverage block quarter Specifically, this which we year. of on have Market expires Francisco, third the space in in XXXX at XX%

roughly and at third XXXX on Park Met tenant have size expiration Seattle after expirations in XX,XXX-foot visibility these, to we'll and on X,XXX negotiating We North by square can a feet. an the their this our have our quarter average have tenant coverage of XX% year. discussions subtenant renew new existing We're with If material largely their close we with expiration We're in addressed with only San a plans currently to more expect requirement. Francisco XXX,XXX-foot square fourth Amazon an also quarter. with downtown XXX,XXX in foot

demand under and are to located Approximately submarkets XX% Peninsula, in our seeing over small the Valley square where deals midsized fourth leases Peninsula of we're XX% square tenant the Valley, XX,XXX signed of assets. resilient, over CBRE, were for the in quarter along these X,XXX under XX% feet. According And the in to feet. of were

our disciplined approach we staying We're monitor new in to development conditions. market as

attractive X projects. development Our consists under pipeline unique and construction of

Oak years this Glen X-state purpose-built adjacent Los in on deliver XX Angeles which studio the track in year. Burbank studio, Our to be will Sunset first is over

more some single continues but some the is regarding prepared we're submarket. commitments, also will for tower, product next as Washington with office discussions leverage including year Denny a the in deliver best model our best and tenants also Seattle's lot, traditional show-by-show for lease well Construction in positioned Triangle stages. We're to several multistage, multiyear at of tenant entire users XXXX which the

mass in the to from one and will proven construction studio foot excellence development square Sunset of the last like potential million awards which track will one X of timber pipeline under platform X.X Apart a winning progress of which our largest be from we've our entitlements North NAIOP we the of Burrard likes tallest in our decade, GRESB, of which and with facilities numerous Over projects and for projects, balance towers and of unique Waltham the ULI. continue designs projects Exchange, contains be the record America's established development Cross, office opportunities, U.K.

when time is commence value, but taking our to ready can pipeline to right. We're this the ensure and construction only timing we create

call turn I'll Harout. the that, to With over

Harout Diramerian

Mark. Thanks,

income Plaza August generated XXXX, Our increased acquisition One offset XXXX. fourth our at fourth to Skyport XX.X% quarter Westside and Qualcomm's from at Quixote driven to Google's partially of in vacancy lease primarily by $XXX.X the July in XXXX quarter XXXX by in commencement compared XXXX, million December revenue

have would market quarter Our by Skyport quarter for XXXXX fourth X.X% to Wilshire, Gower cash vacancy revenue Plaza XXXX, primarily same-store Adjusted increased NOI increased at offset to Sunset at increases fourth XX Qualcomm, in Qualcomm's to XXXX, XXXX. driven same-store in $XXX.X Studios, NOI million our compared and X.X%. property cash by partially July

share excluding FFO, compared of ago. or ago. Fourth quarter per diluted share $X.XX was Fourth per $X.XX diluted transaction-related a $X.X to per and diluted million million to per share or Fourth quarter million per compared $X.XX year share million AFFO tax $X.XX diluted to year specified items or $X.XX diluted compared diluted share or consisted share reimbursements per quarter $X.XX a per $X.XX a or diluted $XX.X expenses $XX.X specified property year share items, $X.X million of was of ago. expenses transactional a of $X.X

Our and XX.X%, dividend our year-to-date quarter that XX% well payout remains fourth ratios underscoring covered. the were for and respectively,

liquidity had to $XXX.X asset cash and under $XXX we of cash sheet. balance fourth our At of sales equivalents credit million end our of the execute revolving facility. in total the continue financing on to and unsecured $XXX.X million million capacity in undrawn unrested and quarter, fortify comprised We

from to secured Pico million of by $XX.X notes another We using million billion respectively. million revolving construction pay unsecured Series A XXXX down $XX now and in Glenoaks, January One our $XXX Landing XXXXX Upon sales and and of this liquidity. proceeds we loans capacity repaying undrawn have Westside, million facility also had February, $X in credit Sunset under $XXX Skyway total

XX.X% our of rata swaps, loan. on debt debt and end rate December pro our the approximately and share net our pro Media of XXXX, fixed on January, in rata Accounting of interest composition forma of basis, million we into XX%. also approximately rate debt interest XX, $XXX.X swaps XXXX a million repayments our In loan and Hollywood capped pro of of portfolio results fixed for as debt these $XXX.X share entered

line $XXX availability. have the end be our and towards million $XX notes debt Quixote maturing note our repaid can December currently maturing in $XXX which XXXX, includes mid-September We million E Series secured from of debt of on XX. This maturing of million

outlook XXXX. our turn for I'll to Now

dispositions, per acquisitions no full initial As are We're with guidance impact of XXXX always, FFO $X.XX any range an in the $X.XX connection and specified guidance to diluted share. financings excludes items providing of capital our guidance. There markets activity. this year

of additions property same-store which redevelopment to of removal Westside, to of cash pool X.X% expect to Xth designated Washington guidance the residential. which We One XXXXX/XXXXX City, and -- same-store the Bell growth and X.X%, NOI to grow property for reflects purposes, we, Harlow the and as Culver and

guidance for full full acquisition, in reflects year year benefit our XXXX. XXXX occurred of first the quarter Our time, which the the third of Quixote

X guidance the the union XX and to event, June not could May slowdown which production and/or this the negotiations of halt reflect ongoing studio on However, does contract production, disruption beyond year. in studio mentioned occur in potential a earlier, of lead activity as strike

Operator? Now we're happy questions. to take your

Operator

with Michael from is question first Our Instructions] Griffin [Operator Citi.

Michael Griffin

talked for for year 'XX. preserving in ahead. your you just can remarks, guidance Victor, start and rent we the occupancy prepared off about on Maybe the

we be to So it included occupancy guess, number would should more and pool it's as moving same-store, expect was to organic as more have growth. the I if the then of function flat? the the that opposed out mean year? in of you I read a do I the be assets as of same-store sense it NFL of this And just this what you seems a sort mean, pool to relates building in like

Victor Coleman

question guys and get Well, in, your I'll let of part second sort me of on jump Michael, start, the to your first.

moving assets not we're and out. So in

opportunity which highest in Culver use. the we to the the best it's marketplace note recognize is when the have a as NFL high that high the was building we I we activity for limited single that in team, know is for from our asset, and on fact And important we City, not users. in upzoning being interest evaluated it's demand anticipated now residential and by as the think

to The keep return capacity. likes in residential But on that be We'll going the to would in we costs the obviously what are returns on we're posted the the you be construction asset much think and higher it. evaluate of ourselves we was had if said, asset, not asset a NFL do kept whether in is basis, anyway on it That that. below or being terms well we in the And TBD. numbers. same-store of it the market going that

'XX, were looking 'XX as do always probably on we're occupancy at at went it do in of the I activity Harout, physical to year and And looking where -- that think asset we the we a probably occupancy, comment was. saw that by you want that?

Harout Diramerian

because Bell Westside in these all do trying is use. of our we assets comply is certain which come to What to right were same-store you're policy, in or and remove states, removed in regardless add do as our Sure. assets, One Harlow, they right? that want policy So which selectively and Xth and supposed that's a really is change being do of to -- don't now, what with is

in asset because same-store another beneficial the one in is of versus And asset. there selecting the Skyport see use that I anyone. the impact don't what is same-store is noticed think in to You to no change

our if XXXXX/XXXXX However, and both cash ignore by would for Skyport Westside we leave same go One and up NOI X%. out

guided So think same-store picking we've pool. that us. assets move And do what certain is any I this This our is on. doesn't cherry of

Michael Griffin

guess Right. my -- I sorry I But understand – that.

Mark Lammas

of year to going beginning X.X just segue lease X signed over our but of that year, square This question started feet square -- on expiration and expirations. as We're NFL X.X are was we decent-sized XX%. about feet, sizable in I kept with than start some expirations feet being with your We are there We that year. less part 'XX occupancy. expirations and pretty X last block million to percentage million and we last close to did million

X our in million view is of now the close that that. so And -- to or have we and activity feet pipeline

to view fairly pinpoint tied the of lease but the either have for in So it's as really up we is flow to moment event. bit our year let's move the in or, expect a therein, year trying set I activity because -- say, on healthy of think leasing to of a success full can our year to needle some backfilling percentage, any But space, time. so ending example, we're be materially block one any successful

Michael Griffin

in in leased, hark again, the have is I same-store own your there quantifying policies, seems get were know think would your that pool. to understand But NFL? in that, Right. have office for if don't you just mean, demand that that should moving if want I pool. not or on which And to [indiscernible]. metrics assets you It to own is me but the still one potential I for be the same-store I

like could, that prepared of level? on this now. a we're that? what can comment to the if that Victor, permanent hybrid one work the right I then remarks mentioned I found in they we environment sort remote your interpret in was just And on office just more just at is transitory guess environment. pre-COVID more, effects used would I in go back assumption the a is as transitory what just I long-term sort given -- quickly. expand you I hybrid mean, of you sort of the word interesting,

expand that could that you bit, If on would a great. be

Victor Coleman

in X sort majority and could reality Yes. the I a normality we're But the some up we or are and stages week of tell post-COVID sense latter region all on seeing through. tenants are some way mean definitely region the plus the you of to our of days listen, I of is what the ground X. are where fully

week. a days X fully are tenants tech our of Some

fire-related a are our week. X tenants of Some days

shrink to level occupancy shrink a XX% an seeing we're we're physical level And average, know is pre-COVID number to that -- I probably overall going seeing -- the from place. -- basically on number fall don't that that. where that So in occupancy

it's And portfolio. in at XX% sort be our at a we're We're at at -- Building, the look we're going we're Ferry we're you But in XX%. if at take in XX% to XX% portfolio feeling looking XX%. that Peninsula, in our to San XX%, look around today, XX%. we're and XX% mean, at the -- we're Vancouver, Seattle, you in if roughly anyways. we're between But Francisco, I

are we've got and so assets that are in XX%. we've our L.A., And assets XXX%, multi-tenant got that and

and XXX%. the XX% is So between average

So I a and establish look going both own shift. socially to And to companies do evolve to continue think presence that's that as we're and seeing their their big culture. within then physically environments

Operator

question from Dave Rodgers next Our Baird. with is

Dave Rodgers

I already and first already year, on guess you've block. Yes. Does signed? XX% still negotiating. leases expirations talked on much to leasing, coverage I that activity about said the get just include the Or you done? sense think is is try particular leases just you're X I you instances, this for that wanted to that in how XX% of a that this those of

Arthur Suazo

Do it's XX%? Dave, Art. the you mean of

Victor Coleman

How it? much of

Dave Rodgers

Yes.

Arthur Suazo

Yes. most and now. is in it that think, Most deals, right stages I is LOI signed, of of X in we negotiation that

Dave Rodgers

services let's get occupancy versus or side do you as studios you're on a Is well providing of down? shutting Can sourcing themselves. just on And that services us would the I union within the you a direct the how say, Star like hit Okay. second whole you? studios guess give maybe, the business impact Victor, studio guess, business much how as for the negotiation. expenses, much kind the impact Quixote sense, Waggons, of I that the that across of

Victor Coleman

time sort right and hot start focus I'll X also of Dave, now, Jeff the yes, -- sort between because to and But this. kick Last first of over negotiation mean, I'm Stotland he's on here I an X. contentious was going around between and specifically unions to foremost, Yes, it SAG it and Union button. DDA right it's was obvious the Riders to

see we going it's now land first strike studios, of first. who's we owned a go right -- When bit a to our grab saw little to XXX-day a

DGA they else because like a everybody production preference, and to leadership ownership, would Our on great have be is seem direction. the side

hopeful and make there. know to it get so don't of what which may precedent, And happen a can we they is out set but head deal we're going what's if all

that. on Specifically, can until we're businesses, are occurs, strikes more line June as our produce sort when looking May, content and that not sound occur. little bit will actual emphatic obviously line more up would the time strike are stages much impacted leases we into our time which by get We a Jeff impacted the operating are some on of on detail

Jeff Stotland

Yes.

if through the those business, utilization impacts it high it occupancy happen, it's once and and So it happens, our impacts a rolls obviously, cost profitability. right? to fixed obviously, down ripples So and strike

Sunset We the have X as you on different sides of brand. business, the know,

XX% of of under lease. Most business, XX%, it long-term our is

-- of on side. the vast really, So economic the there's an much less impact Sunset

collection which the XX% is our sort is stages not a lease On of that under show business as the that short-term well service as by Quixote side, of maybe codes, the are show, lease.

guess So the model. not is this entire lease would the portfolio All I pretty different not last fully roughly it's but at and it's we the under out control, is great, portfolio the I different. obviously impact. look short-term our whole it's say businesses a -- long-term thing obviously, as, that XX-XX. of in, are X But

happens lot it's it. QX, to of QX and recapture So or a most expect demand, ultimately, when recapture a if we whether do that we we expect strike to believe of 'XX,

of about it. how So that's think kind we

Dave Rodgers

Just is recap that XX% if X that, down. the all striking to are shut about at could risk be studio of and

Victor Coleman

Yes.

For the yes. period, temporary

Jeff Stotland

impact each necessarily the a would NOI revenue exact cost The about business. is and short to under because revenue. of XX%, of XX% under But about yes, of it's Well, same term half the the Yes. long term. of be thing half is not nature

Dave Rodgers

me. for Okay. That's helpful. Last one

to currently get and those market for to create into continue appetite the closed, liquidity disposition, and desire get business. to on assets Just the

Victor Coleman

revisit District we time. assets few have is will have year on the dictate bring to Nothing to this are that. last conditions not our a back Arts at and looking timing Listen, pricing market that off at. looked and obviously them we We Market take imminent. more did

done on this quarter, recent was executed closed disposition, -- quarter. we this we last executed was year, our last successfully we it which which and but But most

know anticipate at own. think I So like bring was it We'll them do when Arts District. it you the going not we're parties bring public, to the and you third could assets we we'll on that marketplace our let because just will sort be of to

Operator

is Our from Sandler. with next Alexander Goldfarb question Piper

Alexander Goldfarb

Great.

Just continuing on you have the studio guys business. studio mobile business, the increased

just the the more So seasonality that. downstage of gotten way or studios, to the And of year. want not to that? through the also, now that business to that know We've just back. used But works want I the about traditional the regular an then you depreciation, have more mobile add more is understand

of So that think sort studio and there, about make the sort depreciation in to a what's Harout, now guidance we for -- the sure account that full platform. of have year studio of should be the that any mindful mobile properly we just we we as adjustments big

Harout Diramerian

Thanks, Alex.

kind we've the So illustrate what non for chart, terms the section is more real to range or add-back the our depreciation XXXX in that precise. be depreciation guidance in we of of of provided in not

obviously, our So number closest formerly of probably and the that's it our rate you'll full because QX quarter the products. Zio Quixote the Waggons guidance has just in is to Star a and see run and

that. and best all in is is that's So indication our probably the of that number guidance

Victor Coleman

Yes.

long-term this into to show-by-show we over -- and terms of terms recall, industry we really converted listen, and I in part running In first this your leasing. variability, business, when mean, first your were question, got if of Alex, we you

show it So than is features. that what the upon variable now it's on first difference episodic though success or was the X today goes was are was. as shows we it will the it The screen, small series show, exactly and when X bought the success ago it these which mean in biggest the whatever in the time of based each the when of be a versus studios some and I go that at basis, for pickup.

seasonality always would would years. sometime there starting summer more be unlike early be almost They're -- early till picked April, it and be spring, up and much for in a And March, filming late through carry before, inevitably hiatus. would and X

But specifically various XX/X, times. in see quarters around we August. around again in business, December, XX we different a seasonality filming Now weaknesses There's usually, mobile do months studio year. at see the been it

our now that the capturing there in happen message what pointed we sound between stations. to is around going out. amount And days the location we've both. increase and on we're location production stickiness tried capturing this The what's We're of And a location that is to shoots versus on in all XX% just and Los filmed then studios we're that substantial at studios about our but of our now that's ours, business. we of a level are of almost competitors in specifically Angeles. not shoots amount capturing And friends because control

Alexander Goldfarb

helpful. Okay. Actually, that's

a it much you tenant Seattle and California that you done are the past The content, in is works than it's estate. too your to L.A. owning the still just are has deeper but as a downturns over mean is great do feel of base, if of anything to as trying second Northern business concentrated? got question job sort view, I the will. several decades diversifying And Do in obviously economy. if there communities tech really real investing and for far when compensates local the that upside tech communities more yes, Or its -- diversify?

Victor Coleman

evolving through in businesses, much the is our Well, whether our of business, team concur portfolio whether San it Seattle, has city it related and in. diversity is of entertainment, you're portfolio whether tech, Peninsula, the I small it's our Los most think listen, And in mean your but our in entertainment, LA fire trickled more I Angeles. markets the whether the of statement that leasing people as it's I I just think it's of Angeles. in with statistically seeing the tenants what it's would in Francisco, apparent that is the we're diversified completely did. in How Los all do mean by really,

if currently, XXXX, tech. you is XX% So look thematically at of portfolio our the makeup about

was people were we quarter, Of on look number around somewhere think back XXX-plus You tech about know from footage a less leases. did a you XX it square the did about look know about leases. that. that, at were XX% we And XX% than and But that. if you leases, 'XX, of from if Most -- I tech.

And if you of look XX% were look footage. at -- those portfolio-wide. and and leases XX% this you square And is about about tech if

consistent the spread. that you're seeing it's So

what on valley I business still at political Now in tell community. my thought small community the of sort is saw I heard can't can -- [indiscernible] specifically spearheaded you my communities there that and are the the day, prepared But comment specifically you process you, and remarks. welcoming end of California, is for a environment listen, in the growth,

the mean, next types or tenants entertainment. out not and next they're always all I that hopefully way the And big is VC of coming and has of Google all become grow companies those the and attracted those start with divisions successful. small the tech capital they're of not Amazon clearly,

so history But Francisco diversity companies, capital will because has on in of the the success time. these tech-related the the San just which genesis have the is there. Seattle, Peninsula, of success the be been of And a where the come bit from. takes and little It companies of driven that's

Operator

Ronald with from comes Our next Morgan question Stanley. Camden

Ronald Camden

that Just to break a question. it X% about what's free of what's sort occupancy, different the what's there burning driving that the way sort bumps, Just off? going just Maybe sense back we is a NOI at And trying get rent out could to same-store a way, of midpoint. what's of thinking it growth?

Harout Diramerian

and still think off. granular increase NFL, out I free I that's our same either same-store and got rent we that I earlier Google don't product illustrated ramp-ups disclosure a we where the if store, on if our is were and/or of back think leasing Qualcomm, you big guess, just having I a X% I good and of which movers, know ever burning

Otherwise, I granular the feet of we don't detail, what, get can which average an yes. our think occupancy segment, into is California very X,XXX square especially Northern in --

that picture So it. kind down. to it's really But really that's of hard of the big break

Ronald Camden

just then yes, that helpful. I Does Helpful. think that's

in the of the been in of of has tenants guys those how the thinking sort that's so pipeline about which I sort news to think about thing, talk on Amazon moving you the going? are for and talked the right on about leasing, hit million that? focus just sort you mean of Just sort conversations now. How are are I you saying? Can what $X.X you

Victor Coleman

mean sort 'XX by combat. me the team. start literally leasing feet I was X -- square let in Well, end-to-end the of given of main accolades

And Ronnie, that that so I just leases. a XXX when did was over we mentioned, lot of I work. hard mean

sit think we now. right I indicative of that's where

still where are in choices. have position We a tenants headwind

last their our the line, interested but be until of And we've line. the a likelihood not to ability the so are never to looking at execute write absolute they're at don't the in tenants TIs time check committed before such of of delay the a for they seen to space, able minute. have And that because haven't to and leasing space, time the availability landlord

rent, XXX and to over And come or XXX if the pay they're that. a leading and they the over have in hold times landlords holdover or space others, current to extend you space are are when ratios their our to laying said past,

Now flat take an you time they're your more It's absolute make waiving and decision. and that. can

square in block. on -- X.X feet that with is million indicated at XXX,XXX that Mark a as pipeline, tenants as the his in remarks, X feet of feet So XXX,XXX our prepared sorry, backdrop,

And takes XX%. take I and tenants. X of hard is But -- working X X are on million you those let there Art a so we little that are that. one's tenants, next sort can XXX address and one fit, Those if over the us tenants,

Arthur Suazo

very is the X.X Victor, had carry fact leasing Yes. plus. as finished that mean, feet Mark earlier, be I of the level, we mindful mean, -- that we XXX,XXX square just I indicated you're on. healthy in had spot a

feed the the a in ability our team ground. this pipeline so environment reload for been on our has to And

we a we're so tenants square Victor anticipate square the do about be demand level had. was remainder that talking about footage But of about, the that because I feet. chiefly to X,XXX successes healthy are And going talking of forward we've that or roughly X,XXX mean, the

have in firms. markets, quarters shocking set it the with of X that where Seattle which All the quarters And over significant other uptick matter say, and exception couple as of tech still these dominated -- sector fire will uptick -- a market. fire the fact, the it's the seen Valley really And and Silicon of I tech those have most of surpassed was ago, in sectors service X markets last an a professional tenants driven. --

And this our market-ready the generally super tenants the suites now. right So have been imagine, might have types those looking are favors demand successful. at our that Because we of which we're as you portfolio. Why? is VSP program,

we've time, least out, XX% clip. I think submit we as them an over build

feel about we why back market. bullish so small to And tenant the in that's really the be

Operator

Bank from next [Camila is question with Our of Bonnell] America.

Unidentified Analyst

out there's I a longer of with their if or subleasing from are of in firms cut to Google been the your that understand they're tech planning any termination see Google the stating footprints, tenant latest to office number as I your So but wanted know largest risks term, on you leases back that being they're lease recently coming portfolio. big them

Victor Coleman

in constant obviously Google, with them. have several and we we're listen, Well, Yes. leases contact with

indication have we with of them any not to subleasing our think date. I of seen in assets any

an of one is and feet so. we think have XXX,XXX our which assets, Hillview, at in end think I about early I term 'XX, of that's or the

And had but they've different that's moved maybe chat because That's departments. about keeping half, around. it's X and half the moved terminating some

conversation And the at only our can I think that's that's date. that I team had I has XX recall of as that end the -- to said,

Harout Diramerian

XXXX.

Victor Coleman

'XX, to Beginning thank you.

all date. So that know to [Camila] yes, that's -- that's we

Unidentified Analyst

any for increased or any risk portfolio, the Okay. too? within And tenants from other there, other subleasing any

Victor Coleman

mean Uber one part trying space portfolio include other 'XX. I of their sublease to they're one is into because 'XX. They've already that of listen, the we're And expire about in that in at everybody been and working that, it. that's and the the will on XXXX only but No. they transactions knows

Unidentified Analyst

talking sale your can a you color buyers And were Landing came spend the pricing it. of Skyway expectations? Got bit of And on how around out seeing? you about time types the versus any that you closed recently

Victor Coleman

Yes.

recall, the sciences XX% over or think, to for take occupancy building if approximately, I just ability for us buyer. either a particular ourselves life the this – convert you maybe do to to detenanted on for a bit for the we I’ll So that little last year in plus

science who this was buyers asset. life looking were interest So at the

about about XXX-plus for a I for vacant asset think we foot. effectively sold the

number. the – so And where execution marketplace, pretty we’re today’s was – entertain we not and pleased in result, we And think did financing. one the a ask that’s with I as to carryback

you clean. do add I So was think it? it want Mark, to to

Mark Lammas

mean cash annualized. X% your just a on QX case Yes. than in want it less and cap numbers, you GAAP I that’s rate for

operating makes $XXX And Victor difference the on of forward. our results it did points out, effectively we going no So as to a foot north sale.

on So that. good execution

Operator

is next Our question Yulico with Nick from Scotiabank.

Nick Yulico

if components? and I this Going guidance back to break the studio between wanted to the see you down the office impact year, same-store could NOI for for

Mark Lammas

We right? Yes. without or guiding are our numbers, of I when that. first Nick, all, -- they multi have mean, we're in whatever think out peers not don't their separating

Harout Diramerian

On life sciences.

Mark Lammas

ought On that mean, of pretty It to is office to to X good life of And NOI. office Sciences. be that to the suffice begin at the say, to number the would same-store the to you idea midpoint, I with. composition majority the have vast close to a get numbers. of darn give X%

Nick Yulico

maybe a where change guess, of type earlier that, that's occupancy occupancy at year. of the number you I office up sense And same-store the give on about know you it. could us hard embedded the for terms rate in in growth. Okay. your the of the then, But be same-store office portfolio a I cash lease for like same-store forecast in an following actual just it's end NOI embedded, talked to Got might

Mark Lammas

Look, Nick, guide we if I have guided -- respect were didn't would to look, to But we it. it, going to the tenacity. we

Nick Yulico

All right. Okay.

talking tenant, there going a solely one reliant pithy government guess point, this the at about there. think XXXX might on it's the are -- I that one Just have said it back market And last question tenant. and is is I to prospective tenant? in a you're tenant

And so of deal the sort of that risk likelihood I'm just trying of to getting figure done. out actually

Victor Coleman

tell only say place Listen, that not. get can they're looking if at, you that. or I I'll done can't it the We're

makes And it either so doesn't with it us. or

hopeful directly, else that's we'll if doesn't, it put on it a I not But comes what one we're something out. entertaining. out only question going then So tenant that your number today And to think figure of it. size currently the I'm that to We're something of is. answer

Nick Yulico

is And government a tenant? Okay. it

Victor Coleman

I can't say.

Operator

comes Our John from next Kim BMO. with question

John Kim

big, burn-off same-store helps quarter's there, fourth you this overcome. XXX it's X.X%, really to points at headwind wanted about think, occupancy in which to ask but whether onetime a items in quarter growth, rent any also office had your fee is I Were termination cash I positive free to or basis drop that was there results? year-over-year

Harout Diramerian

There any there probably are are de there minimis. -- if were termination fees,

there's increases and think combination don't it's I a quarter anything And rent of So bumps. partial there. in occupancy in

And some those So there off. It's a drive stats recall, burn it. rent onetime numbers of wasn't anything as would income. that collection just in I rental maybe rent basically

John Kim

guidance. in Okay. And don't fees clarify, just include termination to Correct? your you

Victor Coleman

call If include no, we in termination -- fees? out it we don't guidance, our do, we

Mark Lammas

just peers, We of role not had unlike termination haven't of our our numbers. in fees material many haven't a really much -- much played

Harout Diramerian

clear it And big very calling everywhere. were on we a the out time had we last one,

same-store So FFO. them in even either people understood of the or impact total

John Kim

you about be Can premature, your bit little space opportunity at resi might conversions? you the that whether conversion assets other Culver in or NFL whether a the talk contemplating? but about looking or multifamily portfolio -- you're condo conversion talk science And or for it's this not at can life you're either

Mark Lammas

in corridors. around densify underway is in we're converting Yes. along the Rather clarification is full that's XXXXX not redevelopment. currently residential. a upzoning City the at Maybe of sites transportation taking that a to in It's really What not Culver to conversion. feet Culver XXX,XXX additional exploring City we're sort

comps level, as And our say, There as, are to that could density current that maybe a why it's think point mile many double that it's residential today our at comps for to are under XXX we units. within, somewhere we is development us which support site good think say, pursue. are our radius to opportunity compelling site valuations up a basis, that of GAAP

conversions, real As C that have type obviously conversions, in markets, on really or quality portfolio. within for the other more various residential estate. don't even We happening it's B

mean, may have it the at much physically what -- conversion convert our but for I conversion so entails don't situated we that in the think think for for on of about to of of existing assets. calls, well maybe candidate given think residential opportunity said to nearby we're sort Victor assets happen that are at looking or like, that's least has there's what we a are don't -- be I looks real on We conversion quality past be that portfolio informed the markets I I

John Kim

Okay.

dividend on and me one decision it. your your more for Just to maintain

it's the use given think to X% that you're capital? a are trading but some proceeds committed retaining necessarily, just refreshing maintaining how I the and of you the have might yield for herd year you on dividend you're going not

Victor Coleman

given capital, amount we right creating of the materially differential we're quite dividend. And own, can mean, the listen, position we're in change if our completely for situation a committed whether is won't now. there one I now I And our the lowered our to we're time. be we've It's here maintaining the you liquidity of the right our think some is where dividend. I it's herd had, following lowest is access of of not think, material AFFO the reality see to ratio -- our

going do And of to forward, been by having consistent take mean our going think where an of dividend point, conversations Harout, hopefully this which to. about company, it's indication And has we the that AFFO given at the increasing comment? strength last I of is one going and the year, two, just were because position which our we you one throughout to want we're

Harout Diramerian

interest said, in that factor we we and policy just everything away anything conditions, and guidance. into coverage add activity, economic our not to our also rates, Yes. put Victor dividend to leasing and evaluate that I wanted always current take

something to on an is ongoing we've and least -- decided basis. decrease term in evaluate at maintain dividend we our increase short all not So later thinking or on we that, the again, through whether or

Operator

Our with next from Fargo. question Ku comes Young Wells

Young Ku

on go commentary Just wanted to to back the Google.

mentioned here potentially at think that, aware that XXXX up end could any we other should termination. on? other chunk coming you are that of that's move potential early I there by But Hillview as least a be than of

Victor Coleman

XXXX lease No, is probably there's in nothing in to the our end supplemental of expirations. 'XX. lease next But sometime maybe. it's Foothill The

Harout Diramerian

all in tenant our out all it's listing has there. yes, the all XX leases Google, the of breakdown For and top laid

Mark Lammas

our all supplemental. for And are expirations the quarters outlined X in the of next

Young Ku

what yes, just again. mentioned since spaces And of you Okay. utilization That's the like Google at are different you then, the leases? seeing kind helpful.

Victor Coleman

X think different we'll I they're I almost it's -- because know at groups. XXX% Hillview,

Foothill, sure I X have -- think one buildings, at occupied. we I'm fully pretty is one

out, built believe One or memory buildings, XX,XXX like never off going vacancy there not I'm I but was there that it of the a feet less, a I was they tremendous. little thought -- more. bit

Mark Lammas

of Yes, that some effect. Yes.

yes. So

Young Ku

Got it.

you Harout, That's I And you about this mentioned might think talking helpful. Okay. were have guidance. when

strike So potential you're not any baking right your side on in now, the studio that's right? in guidance

Harout Diramerian

correct. That's

Young Ku

the of then for would kind year? kind and half back production let's was Okay. strike place if, there be of FFO took of minimal the And impact say, there what

Harout Diramerian

question. I'm going Jeff to least relating this just to answer at let Stotland

Jeff Stotland

until attempt materialize. if start the so than contract this X. X the to it like -- going wouldn't materializes would it I does, it's really certain May if say actually now expires and because -- we're we quantify again, Yes, because May But to don't XXX% not strike officially rather that

we earnings have And call X. think I our next like May

it's premature. timing maybe that sense better at But now, impact, Probably we a then. So we'll give point, and the can sense the have of a better right you

Operator

with Green Our next Street. question comes from Dylan Burzinski

Dylan Burzinski

desire you on the that Just some have a out perspective, of developments prepared your curious guys laid allocation capital -- from remarks? start in to any a capital

Mark Lammas

no That which bit Well, on studio we on in really you'll different. We're is side, near-term one conditions if got a start. The XX% that we've development pre-leasing. sure or make office that we some could we we studio of a Waltham had anticipating it's -- did -- there's of ready it. start if We'll are we're not own the -- fully Burrard. recall we that. to site it what far own significant side market indicated kind with on support is think Cross, entitled along. the I Blackstone, We're partnership go monitoring pretty We're yes,

very good. Again, it. conditions we're remain Market monitoring

don't know near-term that, starts. yet that, going don't looking which shake to out. But that have we out is pricing are than other other quite financing, -- we it any we'll how could that We feasible this is But that for to year. start have construction

Dylan Burzinski

And portfolio overall just Okay. curious, That's what's helpful. the mark-to-market on today? the then

Mark Lammas

Yes.

So about both the XXXX across mark entire X%. is mark-to-market the spot X%, about positive. expirations on The portfolio is consolidated

Operator

Malhotra with Mizuho. from Our next question Vikram comes

Vikram Malhotra

tenants. on specific X Just wanted to follow up

news restructuring if see there's is leases. thoughts. any them the One of on Salesforce just Just terminating update or given

there's well. update leaves. or XX update think, have -- if WeWork last you I then spaces given the already, specific And WeWorks wondering back buildings are force just They've any XX on year your on how any spaces sales performing? Just as

Mark Lammas

of amount of that of So sort expiration XX,XXX X-year I with I until we middle time lease. not like feet, on to have sales force, staggered XXXX, the of mean, a earliest fully then Twilio. we expirations occurring mean, still subleased considerable It's have thereafter.

there's nothing I you sales mean, force. update So a to really on immediate

Harout Diramerian

to Let Twilio, me somewhat like above rate. just it's add market an is only that. Not

upside idea profit the sales giving So be would up strange. of their force that returning and

Mark Lammas

the Not Yes. underlying above I'll above market, but directly. clarify. necessarily

in that. sharing profit we're the So of

motivated whatever maintain lease. highly to it can Salesforce do So that to

They've with have them. On we're locations them. front, approached WeWork we X talking us and the to

to on those maintain those can they of For be to incentivized the and there locations, seem to at whatever time pretty they least profitable being, -- pretty do look they X locations.

generating attendance enough market, apparently, that fourth -- even quite been had is that membership. they've they're XXXX there, one's The though not higher

-- in a negotiation we're one, at them in point. with that some probably more end being So up we of

Vikram Malhotra

helpful. That's Okay.

X what terminated could really I be potentially of you're of well. part of guess now, saying, the them Is are But back. X as So of performing fair? maybe or X given that WeWork or

Mark Lammas

I review, I look from WeWork all we up they suppose, is the Yes. be profitable. least to decide. to well, But mean, to at really financials,

Vikram Malhotra

Okay. And just respect ranges. specific the number, I'm looking or then just give for that ultimately guardrails just you on I occupancy, but a can't back to like

today. expirations I'm like Assuming as just you spot where there in on occupancy know the move you book if do was new very Jan little all well as occupancy, wondering new clarify spot X? And can a as the we leasing. you -- outs known are very that -- the

And It if just just leasing point you could because were just be a to you where no us the it's trajectory-wise? of do give tough to low sort or range the -- say new think no new helpful of sort or backfilling, can would -- be you just

Victor Coleman

square because the to okay? the the okay, It's to give in the that still same to not going X.X is end. okay? We're question question, case you either. scenario? guy going if say, here, we're feet. I'm the do stop you out asked now, the answer me the call has We You're fourth million best going high go leased not this same, What's

okay? on, go Let's

Vikram Malhotra

fine. for ultimately, estate, Okay, mean, I I occupancy there's real guess, and rent.

be? us hard I is us that. just for to we'll to be if it say, and give sit can it's here in But helpful I where going or guess So be for midyear you

Victor Coleman

ahead. Go

Vikram Malhotra

committed FAD year, at similar least, you're year, last is FAD this guided was If equivalent you on based last to dividend. on around like it at of the math that safe saw levels FAD. to that around XXX. XXX on the one -- to correct, Is just guess the Maybe my your sort I look what if of of to to is assuming CapEx -- say I range, FFO? FFO a your you've comment CapEx, just

Harout Diramerian

calculations. I of if in different all, FAD, say first But mean, run you can it the I backing work. you're into my mean think we it's I that I those way, right, -- guess numbers AFFO, mean, numbers. sure when I'm you We mind

Mark Lammas

should FFO to other like Company as commencing looking Qualcomm, between -- of significantly correlation sense the But and kind NFL give a an look down. block cash on pretty imply right? might lot adjustments, of extrapolating you the year yes, level, you make year-over-year AFFO vacancy sort as You're is model this at X level those trickier say of between maintain AFFO. to spend and of what little mitigate fair, us that that we to normalize and and help of maybe the you're know, rents impact that have FFO I and which XXXX, and pin at a look, to totally to -- mean, kind in to that LC is would we There's change close I reasonable. on AFFO get terms that in order a of TI Google which

because gets as of way, about lost I want TIs, more what's profound impact can be out, to can those trend the by the directionally and because maybe effective of term. FFO it lose I little point AFFO, a LCs a have going long on think just in rents bit think terms much you on track over net the people and

if And the signed especially what's year. in going look than you prior -- they in term, if our longer XX% you directionally -- lease and leases were of terms on in average 'XX at the were

what elongating years happened And is our They we're quarter really also in X.X So the most important. 'XX. think recent in leases. were I

foot QX were XX% were per Our 'XX. what TI a they they below of basis below square 'XX and costs in were on in XX% than

our sort could drivers terms some think how these AFFO gives of I and I So of -- comfort you think in coverage trend. that some of

Victor Coleman

over our Operator, time we're limit.

and call, our and everybody for over everybody Bye-bye. quarter. next everybody I Appreciate we're the what us, So want I in look that slightly participating in talking we to interest taking apologize to forward thank to was. commitment

Operator

has conference concluded. The

disconnect. now may You

Hudson Pacific Properties (HPP) 9 Feb 232022 Q4 Earnings call transcript